Durham Hospital has been offered a five year contract to provide medical services for a large company$$ employees. The following are revenue and cost related to this contract.

Cost of special equipment related to the contract $200,000$

Working capital required $50,000$

Relining equipment in $4$ years $50,000$

Salvage value of equipment in $5$ years $30,000$

Annual Services revenue $500,000$

Annual Services cost $400,000$

$$ At the end of five years the working capital will be released and may be used elsewhere by Durham.

$$ Durham Hospital uses a discount rate of $14\%.$

Should the contract be accepted based on Net Present Value Method?

Answer rating: 100% (QA)

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